Intrinsic value of Starbucks Corporation - SBUX

Previous Close

$71.96

  Intrinsic Value

$30.57

stock screener

  Rating & Target

str. sell

-58%

Previous close

$71.96

 
Intrinsic value

$30.57

 
Up/down potential

-58%

 
Rating

str. sell

We calculate the intrinsic value of SBUX stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 89.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  9.20
  8.78
  8.40
  8.06
  7.76
  7.48
  7.23
  7.01
  6.81
  6.63
  6.46
  6.32
  6.19
  6.07
  5.96
  5.86
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
  5.34
  5.30
  5.27
  5.24
  5.22
  5.20
Revenue, $m
  26,994
  29,364
  31,832
  34,398
  37,065
  39,838
  42,719
  45,713
  48,825
  52,061
  55,427
  58,928
  62,574
  66,371
  70,327
  74,451
  78,753
  83,243
  87,929
  92,825
  97,940
  103,287
  108,879
  114,728
  120,849
  127,255
  133,964
  140,989
  148,348
  156,059
Variable operating expenses, $m
  22,444
  24,374
  26,384
  28,474
  30,647
  32,905
  35,251
  37,690
  40,225
  42,860
  45,143
  47,995
  50,964
  54,056
  57,278
  60,637
  64,141
  67,797
  71,615
  75,602
  79,768
  84,123
  88,677
  93,441
  98,426
  103,644
  109,107
  114,829
  120,823
  127,103
Fixed operating expenses, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
Total operating expenses, $m
  22,443
  24,373
  26,383
  28,473
  30,646
  32,904
  35,250
  37,689
  40,224
  42,859
  45,142
  47,994
  50,963
  54,055
  57,277
  60,636
  64,140
  67,796
  71,613
  75,600
  79,766
  84,121
  88,675
  93,439
  98,424
  103,642
  109,105
  114,827
  120,821
  127,101
Operating income, $m
  4,551
  4,991
  5,449
  5,925
  6,420
  6,934
  7,469
  8,025
  8,602
  9,202
  10,285
  10,935
  11,612
  12,316
  13,050
  13,815
  14,614
  15,447
  16,316
  17,225
  18,174
  19,166
  20,203
  21,289
  22,424
  23,613
  24,858
  26,161
  27,527
  28,958
EBITDA, $m
  6,162
  6,703
  7,266
  7,852
  8,461
  9,093
  9,751
  10,434
  11,145
  11,883
  12,651
  13,451
  14,283
  15,149
  16,052
  16,993
  17,975
  19,000
  20,070
  21,187
  22,354
  23,575
  24,851
  26,186
  27,583
  29,045
  30,576
  32,180
  33,859
  35,619
Interest expense (income), $m
  97
  510
  378
  474
  573
  677
  785
  897
  1,013
  1,134
  1,260
  1,391
  1,527
  1,668
  1,815
  1,969
  2,128
  2,295
  2,469
  2,650
  2,840
  3,037
  3,244
  3,460
  3,686
  3,922
  4,170
  4,428
  4,699
  4,983
  5,280
Earnings before tax, $m
  4,041
  4,613
  4,975
  5,352
  5,743
  6,150
  6,572
  7,011
  7,468
  7,943
  8,895
  9,409
  9,943
  10,501
  11,081
  11,687
  12,318
  12,978
  13,666
  14,385
  15,136
  15,922
  16,743
  17,603
  18,502
  19,444
  20,430
  21,462
  22,544
  23,677
Tax expense, $m
  1,091
  1,246
  1,343
  1,445
  1,551
  1,660
  1,775
  1,893
  2,016
  2,144
  2,402
  2,540
  2,685
  2,835
  2,992
  3,155
  3,326
  3,504
  3,690
  3,884
  4,087
  4,299
  4,521
  4,753
  4,996
  5,250
  5,516
  5,795
  6,087
  6,393
Net income, $m
  2,950
  3,368
  3,632
  3,907
  4,192
  4,489
  4,798
  5,118
  5,452
  5,798
  6,493
  6,868
  7,259
  7,666
  8,089
  8,531
  8,993
  9,474
  9,976
  10,501
  11,050
  11,623
  12,223
  12,850
  13,507
  14,194
  14,914
  15,667
  16,457
  17,284

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  22,439
  24,409
  26,460
  28,593
  30,811
  33,116
  35,510
  37,999
  40,586
  43,276
  46,074
  48,985
  52,015
  55,171
  58,460
  61,888
  65,464
  69,196
  73,092
  77,161
  81,413
  85,858
  90,506
  95,368
  100,456
  105,782
  111,358
  117,198
  123,315
  129,725
Adjusted assets (=assets-cash), $m
  22,439
  24,409
  26,460
  28,593
  30,811
  33,116
  35,510
  37,999
  40,586
  43,276
  46,074
  48,985
  52,015
  55,171
  58,460
  61,888
  65,464
  69,196
  73,092
  77,161
  81,413
  85,858
  90,506
  95,368
  100,456
  105,782
  111,358
  117,198
  123,315
  129,725
Revenue / Adjusted assets
  1.203
  1.203
  1.203
  1.203
  1.203
  1.203
  1.203
  1.203
  1.203
  1.203
  1.203
  1.203
  1.203
  1.203
  1.203
  1.203
  1.203
  1.203
  1.203
  1.203
  1.203
  1.203
  1.203
  1.203
  1.203
  1.203
  1.203
  1.203
  1.203
  1.203
Average production assets, $m
  7,720
  8,398
  9,104
  9,838
  10,601
  11,394
  12,218
  13,074
  13,964
  14,889
  15,852
  16,854
  17,896
  18,982
  20,113
  21,293
  22,523
  23,807
  25,148
  26,548
  28,011
  29,540
  31,139
  32,812
  34,563
  36,395
  38,314
  40,323
  42,428
  44,633
Working capital, $m
  -1,944
  -2,114
  -2,292
  -2,477
  -2,669
  -2,868
  -3,076
  -3,291
  -3,515
  -3,748
  -3,991
  -4,243
  -4,505
  -4,779
  -5,064
  -5,360
  -5,670
  -5,993
  -6,331
  -6,683
  -7,052
  -7,437
  -7,839
  -8,260
  -8,701
  -9,162
  -9,645
  -10,151
  -10,681
  -11,236
Total debt, $m
  6,998
  8,771
  10,617
  12,537
  14,533
  16,607
  18,763
  21,003
  23,331
  25,752
  28,269
  30,889
  33,616
  36,457
  39,417
  42,502
  45,721
  49,079
  52,586
  56,248
  60,075
  64,075
  68,258
  72,634
  77,214
  82,007
  87,025
  92,281
  97,787
  103,556
Total liabilities, $m
  20,195
  21,968
  23,814
  25,734
  27,730
  29,804
  31,959
  34,199
  36,528
  38,948
  41,466
  44,086
  46,813
  49,654
  52,614
  55,699
  58,918
  62,276
  65,783
  69,445
  73,272
  77,272
  81,455
  85,831
  90,410
  95,204
  100,222
  105,478
  110,984
  116,752
Total equity, $m
  2,244
  2,441
  2,646
  2,859
  3,081
  3,312
  3,551
  3,800
  4,059
  4,328
  4,607
  4,898
  5,201
  5,517
  5,846
  6,189
  6,546
  6,920
  7,309
  7,716
  8,141
  8,586
  9,051
  9,537
  10,046
  10,578
  11,136
  11,720
  12,332
  12,972
Total liabilities and equity, $m
  22,439
  24,409
  26,460
  28,593
  30,811
  33,116
  35,510
  37,999
  40,587
  43,276
  46,073
  48,984
  52,014
  55,171
  58,460
  61,888
  65,464
  69,196
  73,092
  77,161
  81,413
  85,858
  90,506
  95,368
  100,456
  105,782
  111,358
  117,198
  123,316
  129,724
Debt-to-equity ratio
  3.120
  3.590
  4.010
  4.380
  4.720
  5.010
  5.280
  5.530
  5.750
  5.950
  6.140
  6.310
  6.460
  6.610
  6.740
  6.870
  6.980
  7.090
  7.190
  7.290
  7.380
  7.460
  7.540
  7.620
  7.690
  7.750
  7.810
  7.870
  7.930
  7.980
Adjusted equity ratio
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,950
  3,368
  3,632
  3,907
  4,192
  4,489
  4,798
  5,118
  5,452
  5,798
  6,493
  6,868
  7,259
  7,666
  8,089
  8,531
  8,993
  9,474
  9,976
  10,501
  11,050
  11,623
  12,223
  12,850
  13,507
  14,194
  14,914
  15,667
  16,457
  17,284
Depreciation, amort., depletion, $m
  1,611
  1,712
  1,817
  1,927
  2,041
  2,159
  2,282
  2,410
  2,543
  2,681
  2,366
  2,515
  2,671
  2,833
  3,002
  3,178
  3,362
  3,553
  3,753
  3,962
  4,181
  4,409
  4,648
  4,897
  5,159
  5,432
  5,718
  6,018
  6,332
  6,662
Funds from operations, $m
  4,561
  5,079
  5,449
  5,833
  6,233
  6,648
  7,080
  7,528
  7,994
  8,479
  8,859
  9,384
  9,930
  10,499
  11,091
  11,709
  12,354
  13,027
  13,730
  14,463
  15,230
  16,032
  16,870
  17,747
  18,665
  19,626
  20,632
  21,686
  22,789
  23,946
Change in working capital, $m
  -164
  -171
  -178
  -185
  -192
  -200
  -207
  -216
  -224
  -233
  -242
  -252
  -262
  -273
  -285
  -297
  -310
  -323
  -337
  -352
  -368
  -385
  -403
  -421
  -441
  -461
  -483
  -506
  -530
  -555
Cash from operations, $m
  4,725
  5,250
  5,627
  6,018
  6,425
  6,848
  7,287
  7,744
  8,218
  8,712
  9,101
  9,636
  10,192
  10,772
  11,376
  12,006
  12,664
  13,350
  14,067
  14,816
  15,599
  16,417
  17,273
  18,169
  19,106
  20,087
  21,115
  22,191
  23,319
  24,501
Maintenance CAPEX, $m
  -1,055
  -1,152
  -1,253
  -1,359
  -1,468
  -1,582
  -1,701
  -1,824
  -1,951
  -2,084
  -2,222
  -2,366
  -2,515
  -2,671
  -2,833
  -3,002
  -3,178
  -3,362
  -3,553
  -3,753
  -3,962
  -4,181
  -4,409
  -4,648
  -4,897
  -5,159
  -5,432
  -5,718
  -6,018
  -6,332
New CAPEX, $m
  -655
  -678
  -706
  -734
  -763
  -793
  -824
  -856
  -890
  -925
  -963
  -1,002
  -1,043
  -1,086
  -1,131
  -1,180
  -1,230
  -1,284
  -1,340
  -1,400
  -1,463
  -1,529
  -1,599
  -1,673
  -1,751
  -1,832
  -1,919
  -2,009
  -2,105
  -2,205
Cash from investing activities, $m
  -1,710
  -1,830
  -1,959
  -2,093
  -2,231
  -2,375
  -2,525
  -2,680
  -2,841
  -3,009
  -3,185
  -3,368
  -3,558
  -3,757
  -3,964
  -4,182
  -4,408
  -4,646
  -4,893
  -5,153
  -5,425
  -5,710
  -6,008
  -6,321
  -6,648
  -6,991
  -7,351
  -7,727
  -8,123
  -8,537
Free cash flow, $m
  3,015
  3,420
  3,668
  3,925
  4,194
  4,473
  4,763
  5,064
  5,377
  5,702
  5,917
  6,268
  6,634
  7,015
  7,412
  7,825
  8,256
  8,705
  9,173
  9,662
  10,173
  10,707
  11,265
  11,848
  12,458
  13,096
  13,764
  14,464
  15,196
  15,963
Issuance/(repayment) of debt, $m
  -2,442
  1,773
  1,846
  1,920
  1,996
  2,074
  2,155
  2,240
  2,328
  2,421
  2,518
  2,620
  2,727
  2,840
  2,960
  3,086
  3,218
  3,359
  3,506
  3,662
  3,827
  4,000
  4,183
  4,376
  4,579
  4,793
  5,019
  5,256
  5,506
  5,769
Issuance/(repurchase) of shares, $m
  1,378
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -1,064
  1,773
  1,846
  1,920
  1,996
  2,074
  2,155
  2,240
  2,328
  2,421
  2,518
  2,620
  2,727
  2,840
  2,960
  3,086
  3,218
  3,359
  3,506
  3,662
  3,827
  4,000
  4,183
  4,376
  4,579
  4,793
  5,019
  5,256
  5,506
  5,769
Total cash flow (excl. dividends), $m
  1,951
  5,193
  5,513
  5,845
  6,190
  6,547
  6,918
  7,304
  7,705
  8,123
  8,434
  8,888
  9,361
  9,856
  10,371
  10,910
  11,474
  12,063
  12,680
  13,325
  14,000
  14,707
  15,448
  16,224
  17,037
  17,889
  18,783
  19,720
  20,702
  21,732
Retained Cash Flow (-), $m
  -4,328
  -197
  -205
  -213
  -222
  -230
  -239
  -249
  -259
  -269
  -280
  -291
  -303
  -316
  -329
  -343
  -358
  -373
  -390
  -407
  -425
  -444
  -465
  -486
  -509
  -533
  -558
  -584
  -612
  -641
Prev. year cash balance distribution, $m
  3,254
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  877
  4,996
  5,308
  5,632
  5,968
  6,316
  6,679
  7,055
  7,446
  7,854
  8,155
  8,597
  9,058
  9,540
  10,043
  10,568
  11,116
  11,690
  12,290
  12,918
  13,575
  14,263
  14,983
  15,738
  16,528
  17,357
  18,225
  19,136
  20,090
  21,091
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  841
  4,574
  4,620
  4,637
  4,626
  4,584
  4,512
  4,409
  4,278
  4,118
  3,873
  3,669
  3,444
  3,203
  2,948
  2,685
  2,419
  2,153
  1,892
  1,641
  1,404
  1,183
  982
  802
  643
  506
  391
  296
  219
  159
Current shareholders' claim on cash, %
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

Starbucks Corporation (Starbucks) is a roaster, marketer and retailer of coffee. As of October 2, 2016, the Company operated in 75 countries. The Company operates through four segments: Americas, which is inclusive of the United States, Canada, and Latin America; China/Asia Pacific (CAP); Europe, Middle East, and Africa (EMEA), and Channel Development. The Company's Americas, CAP, and EMEA segments include both company-operated and licensed stores. Its Channel Development segment includes roasted whole bean and ground coffees, Tazo teas, Starbucks- and Tazo-branded single-serve products, a range of ready-to-drink beverages, such as Frappuccino, Starbucks Doubleshot and Starbucks Refreshers beverages and other branded products sold across the world through channels, such as grocery stores, warehouse clubs, specialty retailers, convenience stores and the United States foodservice accounts.

FINANCIAL RATIOS  of  Starbucks Corporation (SBUX)

Valuation Ratios
P/E Ratio 35.7
Price to Sales 4.6
Price to Book 18.9
Price to Tangible Book
Price to Cash Flow 24.7
Price to Free Cash Flow 38.8
Growth Rates
Sales Growth Rate 5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 5.5%
Cap. Spend. - 3 Yr. Gr. Rate 5.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 72.2%
Total Debt to Equity 72.2%
Interest Coverage 46
Management Effectiveness
Return On Assets 20.6%
Ret/ On Assets - 3 Yr. Avg. 22.1%
Return On Total Capital 30.6%
Ret/ On T. Cap. - 3 Yr. Avg. 32.7%
Return On Equity 50.9%
Return On Equity - 3 Yr. Avg. 49.6%
Asset Turnover 1.6
Profitability Ratios
Gross Margin 59.6%
Gross Margin - 3 Yr. Avg. 59.7%
EBITDA Margin 24.5%
EBITDA Margin - 3 Yr. Avg. 25%
Operating Margin 18.5%
Oper. Margin - 3 Yr. Avg. 19.5%
Pre-Tax Margin 19.3%
Pre-Tax Margin - 3 Yr. Avg. 19.8%
Net Profit Margin 12.9%
Net Profit Margin - 3 Yr. Avg. 13.5%
Effective Tax Rate 33.2%
Eff/ Tax Rate - 3 Yr. Avg. 31.8%
Payout Ratio 50.3%

SBUX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SBUX stock intrinsic value calculation we used $24720 million for the last fiscal year's total revenue generated by Starbucks Corporation. The default revenue input number comes from 0001 income statement of Starbucks Corporation. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our SBUX stock valuation model: a) initial revenue growth rate of 9.2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for SBUX is calculated based on our internal credit rating of Starbucks Corporation, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Starbucks Corporation.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of SBUX stock the variable cost ratio is equal to 83.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $-1 million in the base year in the intrinsic value calculation for SBUX stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Starbucks Corporation.

Corporate tax rate of 27% is the nominal tax rate for Starbucks Corporation. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the SBUX stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for SBUX are equal to 28.6%.

Life of production assets of 6.7 years is the average useful life of capital assets used in Starbucks Corporation operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for SBUX is equal to -7.2%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1169.5 million for Starbucks Corporation - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1243.668 million for Starbucks Corporation is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Starbucks Corporation at the current share price and the inputted number of shares is $89.5 billion.

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